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A Darling Little House

July 15, 2017 by  
Filed under blog

Many years ago, I wrote a book called The Courage to be Rich. This week, I re-read some of that book and, in particular, a chapter entitled “How Yuks Can Create Big Bucks”. It reminded me again that making money by acquiring beat up, old, dirt bag properties and adding your own sweat equity can make a person rich today in the exact same way it did 30 and 40 years ago. In fact, right now, with many properties selling for top dollar, it makes even more sense to lower your financial risk by investing in these kinds of properties. Here is an excerpt from that section of the book.

Changing a Tacky Dump into a Swiss Chalet

I really couldn’t believe what I saw. A few years ago, while driving down a street in Salt Lake City, I glanced over at a little white house, maybe a thousand square feet at the most, and I just about drove off the road. The formerly grungy house had been completely transformed. Instead of a tacky little house complete with cluttered yard, worn grass, and garbage cans by the porch, I saw a cute, Swiss chalet cottage. The change was so stunning that I pulled over to stop and stare.

At first glance, it seemed that someone had spent a ton of dough making the property shine. Upon closer inspection, I found that the changes made on the outside of the property were quite inexpensive. The dirty sides of the house had been covered up by a fresh coat of paint, and Swiss style shutters with decorative patterns had been placed on either side of the windows. The garbage cans had been moved from the front yard to the back. For extra frosting, a white picket fence had been put along the front of the yard. One other conspicuous difference was a FOR SALE sign prominently displayed.

I was totally amazed at the change, but even more amazed at my reaction to the changes! I had, for years, been in the business of buying properties that needed fixing up and, after some work, would resell or refinance them at substantial profits.

Prior to stopping at this house, I considered myself very smart and successful at what I did. But here is the huge shocking part of this experience. My first reaction was: “What a cute little house! It’s absolutely darling. I should buy it!”

Talk about dumb–really dumb. Here I am in the business of buying dirt bag properties, fixing them up and making big money selling them and this little house almost fooled me into buying it. But now as I think about it, that experience is teaching me a big lesson.

Almost everybody would rather buy a property that looks nice and new and pretty. That’s just normal in us human beings. That’s why people are making money by fixing and fancying up beat up houses and apartments. And now in today’s market where a lot of properties are at top prices, these types of properties are the safer investment. You can greatly increase your chance of making money by doing the simple fixes that stand out and grab people’s attention!

That darling Swiss looking house certainly did it for me and needs to be duplicated. Or should I say, “Hey, here is another way showing how you can make big bucks from yuks.”

Big Money in Cosmetic Fixes

August 8, 2014 by  
Filed under blog

As discussed last week, you can turn a 10% gain into a 100% gain using your sweat equity on the right real estate asset. Grabbing up run=down properties worked miracles for me, eventually adding millions of dollars to my net worth. You can do the same thing. But, you ask, exactly how do I direct my efforts? What do I fix up to make the property worth more? The simple short answer is paint, carpet, cleaning and basic accessories such as attractive plants and pictures on the walls and a nice green lawn and shrubbery in the yard. This is because you would be buying property that doesn’t needs more than a face lift but which you can buy cheap simply because it looks bad.

Now if you are like me and not particularly good as a handyman then you’ll probably want to use what I call OPE–other people’s efforts. I hired high school kids for just a few bucks an hour. I found from experience that paying people hourly, if you can keep an eye on them, is far less expensive than getting bids on the work needed. I should also say that most fortunes are made through the use of OPM (other people’s money) as we mentioned in earlier posts. So OPM combined with OPE is your formula for great wealth with this approach.

I should also add that I am not very good with any kind of design or decoration decisions, inside or outside. So what did I do about that? Basically two things–I picked other people’s brains as well as copying success, both without cheating. Picking people’s brains is pretty easy since people like to talk about themselves and what they do for a living. I would simply take designers, architects and other professionals to lunch and pick their brains for the cost of a meal.

Copying success is not that hard either, it’s mainly a matter of paying attention to what works then doing the same thing. I will never forget the beat up little house that I bought that was in desperate need of a major design update on the front of this very sad structure. I was trying hard to figure out exactly what to do with the face of this house when the obvious solution suddenly hit me. The basic house structure and layout was almost identical to the house next door–even though you really had to look hard to notice that with my house being such a disaster. The house next door was absolutely beautiful and a delight to look at. It looked like “the little cottage in the woods” that we read about and picture when we were kids.

So what I did was essentially take the lazy man’s option and I had my people do an exact copy of that nice house in every detail– the exact same color of paint, the exact same window coverings and shutters and all the cutesy stuff around the yard and on the lawn. Bottom line, the house looked fantastic and I sold it in short order. There is one postscript to the story–the neighbor was irrate! So much so that he repainted and redesigned the front of his house as he didn’t want to live next door to an identical twin! I didn’t really blame him but it was a bit of compliment to him too. Not sure he saw that.

One big thing to keep in mind as you are using your own sweat equity or using OPE to do this fix up work, keep yourself totally motivated and firmly place in your head that this “grunt work” can and will turn a potential 10% gain into 100% gain. With those kinds of numbers and with enough time, it will turn thousands of dollars into millions!